RULE SUMMARY

This rule mandates changes to the federal pipeline safety regulations in 49 CFR Part 192, which cover the transportation of natural gas by pipeline. Specifically, PHMSA is allowing natural gas transmission pipeline operators to raise the maximum allowable operating pressure (MAOP) for certain pipelines (1) constructed of steel pipe manufactured using modern steel chemistry and rolling practices and standards, and (2) inspected and tested to more rigorous standards.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?

The RIA is found on the docket for the rulemaking, which can be found with keywords (four clicks). It could not be found on PHMSA's website, although the rule itself was there.

3/5

2. How verifiable are the data used in the analysis?

Most data sources are mentioned but some not. Some sources were from industry submissions that seem unverifiable or at least difficult to verify.

2/5

3. How verifiable are the models and assumptions used in the analysis?

Some assumptions are not verifiable either because the reasoning isn't mentioned or because it came from an industry source.

2/5

4. Was the analysis comprehensible to an informed layperson?

The RIA is very readable and comprehensible, making few assumptions and using direct language. An economist would understand all of it.

4/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?

2/5

Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?

The stated goals are to ease regulatory burdens, encourage develoment of new infrastructure, improve regulatory certainty, reduce agency workload, and increase gas shipping capacity. These outcomes are not directly linked to citizen quality of life in the RIA.

3/5

Does the analysis identify how these outcomes are to be measured?

For the outcomes, the RIA claims that no measures exist and instead relies on estimates based on assumptions and possible prices (e.g. of steel or natural gas).

1/5

Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?

It is coherent but not testable because of a lack of data. It also makes too many claims of benefits that are unquantifiable.

1/5

Does the analysis present credible empirical support for the theory?

If the lack of data is true, then simulations are all they can do; but they don't even do that for most benefits, and that is not empirical support.

0/5

Does the analysis adequately assess uncertainty about the outcomes?

For the outcomes considered, the RIA does analyze how they would change if certain parameters were different from the assumed case (e.g. gas price changes, mileage changes, anomaly repair rate changes). It would get higher marks if the uncertainty for "unquantifiable" outcomes was at least discussed.

3/5

6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?

3/5

Does the analysis identify a market failure or other systemic problem?

The systemic problem is the current regulation keeps pressure too low relative to what technological adaptations have allowed pipelines to safely carry.

5/5

Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?

Yes, because of the previously prevailing rule.

5/5

Does the analysis present credible empirical support for the theory?

Support comes from the successful applications and grants of waivers for higher pressure operations given to some firms. This is not well quantified, though.

3/5

Does the analysis adequately assess uncertainty about the existence or size of the problem?

The analysis does not address this topic.

0/5

7. How well does the analysis assess the effectiveness of alternative approaches?

0/5

Does the analysis enumerate other alternatives to address the problem?

The only options considered are the proposed rule and delaying the proposed rule.

1/5

Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?

The range is very narrow.

0/5

Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?

The analysis does not address this topic.

0/5

Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?

No; the baseline is dismissed.

0/5

8. How well does the analysis assess costs and benefits?

2/5

Does the analysis identify and quantify incremental costs of all alternatives considered?

All are probably identified, but not all well quantified. Many quantifications are based off assumptions that may not be verifiable. Other options' costs are not considered.

2/5

Does the analysis identify all expenditures likely to arise as a result of the regulation?

All are probably identified, but not all well quantified. Many quantifications are based off assumptions that may not be verifiable. Other options' costs are not considered.

3/5

Does the analysis identify how the regulation would likely affect the prices of goods and services?

The analysis does not address this topic.

0/5

Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?

The analysis points out that the new regulation would encourage more laying of pipeline.

1/5

If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?

Uncertainty in costs and benefits is analyzed in a multi-scenario fashion.

4/5

Does the analysis identify the alternative that maximizes net benefits?

Given the VERY narrow range of options considered, yes.

3/5

Does the analysis identify the cost-effectiveness of each alternative considered?

The analysis does not address this topic.

0/5

Does the analysis identify all parties who would bear costs and assess the incidence of costs?

Not explicitly, but it seems that most or all costs would fall on gas pipeline operators. Not sure whether these costs would be passed along - not addressed.

1/5

Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?

The expanded capacity is said to benefit NY a lot. That seems to be the extent of specific parties who would benefit, other than pipelines making greater profit.

2/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?

Given the very narrow range of options (the proposed rule, or the proposed rule delayed), the RIA seems like a formality.

1/5

10. Did the agency maximize net benefits or explain why it chose another alternative?

Yes, but only from a very narrow range.

2/5

11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?

No, despite the lack of measures often cited in the RIA.

0/5

12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?